Government urged to show restraint amid €2bn overspend
Speaking at an Oireachtas committee about Budget 2026, chair of the Irish Fiscal Advisory Council (Ifac) Séamus Coffey told committee members that current spending overruns this year are likely to exceed €2bn.
'Recent budgets have pumped money into an economy that is already performing well,' Mr Coffey told the committee.
'After accounting for exceptional corporation tax and a strong economy, the government is running a substantial deficit. This is equivalent to more than €2,500 per worker.'
The Government is currently preparing its summer economic statement, a key budgetary document that will indicate the parameters for spending increases in the October budget.
Speaking on Budget 2026 which will take place in October, the council chair and University College Cork lecturer said spending growth should be no faster than the sustainable growth rate of the economy, given that it continues to perform well in the face of rising uncertainty and looming tariff measures.
'That is not to say the government can't try to improve public services, support households that are struggling or upgrade Ireland's infrastructure,' Mr Coffey told the committee.
'But it means that choices would need to be made. If the Government wants to spend more in a certain area, or tax less in another, it needs to offset that by doing less in other areas.'
"We don't want to see this boom and bust cycle that has plagued Irish fiscal policy for the last 40 or 50 years," Mr Coffey told the Oireachtas Budgetary Oversight Committee.
The council also identified three key challenges for the Government, with these being an ageing population, the need to manage Ireland's climate transition, and infrastructure, which Ifac said is 'about 25% behind [Ireland's] peers'.
The budgetary watchdog issued four key recommendations to the Government, the first of which was the coalition's need to reduce the ups and downs of the economic cycle.
'This means showing restraint when the economy is strong and being more generous when the economy is struggling,' Mr Coffey told committee members.
Second, the Government was urged to set spending limits, net of tax changes, that it believes are sustainable to reduce the vagaries of annual pressure as Budget Day approaches.
Third, Ifac urged the Government to focus on competitiveness and infrastructure, adding: 'While there is uncertainty over many issues, the shortage of infrastructure will need to be addressed regardless of what the international environment looks like.'
Lastly, the watchdog has urged the Government to improve how it forecasts spending, calling out what it called a failure to account for overspending in 2024 when planning for this year.
'This created unrealistic budget figures from the beginning - a problem that keeps recurring,' said Mr Coffey.
'To avoid repeating this mistake, Budget 2026 and future medium-term plans must start with accurate baseline figures that include all likely overspends in 2025. Otherwise, spending projections will be wrong from the outset.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Irish Examiner
3 hours ago
- Irish Examiner
Sarah Harte: Limiting freedom of speech is a threat to a functioning democracy
The poet and public intellectual Thomas McCarthy told me this week that he thought the Western World was depressed. One depressing and alarming development is the erosion of freedom of speech. Censorship is proliferating in front of our eyes, and it's reached our shores with real-life consequences for our adult children. America, no longer the land of the brave and the free, is where Irish J1 students will have their social media posts checked going back five years. There is something surreal about this. Big Brother is watching you but not even bothering to hide it. Last week, it was reported in the Irish Examiner that visa applicants must 'list all social media usernames or handles of every platform they have used from the last five years on the DS-160 visa application form.' Privacy settings on all social media platforms must be set to public. Talk about having a chilling effect on freedom of speech among a crop of young people who have just come of voting age. We need their young voices. I chatted to a retired senior judge about this last weekend, and he was horrified by the development. As he said, bad things like this happen incrementally, until one day you wake up to a knock on the door and think, 'Jesus, how did we get here?' Workers stand handcuffed after being arrested by U.S. Immigration and Customs Enforcement, ICE, at Delta Downs Racetrack, Hotel and Casino in Calcasieu Parish, near Vinton, Louisiana last month. Photo: U.S. Immigration and Customs Enforcement via AP Both the Taoiseach and the Tánaiste have expressed concern. Simon Harris intends to raise the matter with the new US Ambassador next month. Micheál Martin has stated that he disagrees with the measures. In reality, the American Immigration and Customs Enforcement (ICE) now essentially reject travellers to the United States who are not ideologically in line with the regime. The parameters of what is considered dissent against the regime seem broad and vague. Imagine if we checked the phones of American tourists in Dublin and said, 'No, sorry, you don't get to see the Cliffs of Moher or the Book of Kells because we see from your social media posts that you deny the genocide in Gaza and you seem supportive of Benjamin Netanyahu'. What the hell has happened to America with its modern-day version of McCarthyism restraining people who hold opposing views? Are all lessons from the past being lost? Barack Obama, who has frustrated many Democrats with his relative silence on a range of subjects in the USA, issued a warning a week ago that America is dangerously close to losing its democracy. Except it's not just in America that this censorship is taking place. Kneecap fans at Glastonbury at the weekend. Following the festival, British police are considering whether to launch criminal investigations into the hip hop group and punk duo Bob Vylan. Freedom of speech has been under relentless attack in the UK. Their Public Order Act 1986 is capable of broad interpretation. In tandem with two further acts of 2002 and 2022, it effectively allows policing to be politicised with jokes, social media posts, and even private conversations arguably coming within their dragnet. Following the Glastonbury Festival last weekend, British police are considering whether to launch criminal investigations into two acts: the Irish hip-hop group Kneecap and the punk duo Bob Vylan. One of the members of Bob Vylan chanted 'Death, death, to the IDF'. The police announced the possibility of an investigation on Saturday on X. You might not like what someone says, but you may want to ensure that people still have the right to say it. The question is, where does cultural resistance and performance (including satire) end and terrorism or incitement to hatred begin? This is not an easy question to answer, but it is a vitally important one. While 'Glasto' was going on, John Brennan, former Director of the CIA, addressed a summer school for the Law Society's Centre for Justice and Law Reform in Dublin. It was on the theme 'Defending Democracy: Legal Responses to Emerging Threats'. He remarked on the 'delicate balance' faced by governments in permitting free speech while prohibiting hate speech and incitement to violence. We've had a back-and-forth on this ourselves, with hate speech laws being dropped last year by former minister for justice Helen McEntee due to a lack of consensus on the thorny issue. I have found myself flip-flopping on the subject, but I have come to believe that we should probably be wary of hate speech laws for fear of stifling public discourse. Kneecap It is precisely because clamping down on freedom of expression is taken so seriously by human rights lawyers that Kneecap's frontman, Liam Óg Ó hAnnaidh, who performs under the name Mo Chara, has attracted an extraordinarily heavyweight legal team defending him in his alleged terrorism offence. He was charged last month for allegedly displaying a flag in support of Iran-backed militant group Hezbollah at a concert in November 2024. He has firmly denied the charge but is currently on bail. Ó hAnnaidh's legal team (Kneecap call them An Scoithfhoireann or the Dream Team) is a roll call of who's who in human rights law, including Gareth Peirce, who formerly represented the Guildford Four and the Birmingham Six. Peirce has devoted decades to defending underdogs. Critics see her as destabilising the establishment and undermining national security, which is the catch-all rationale that the Americans are using now to reject visa applications or even detain people. Peirce has spoken in the past about the dangers of stigmatising people as a threat to national security when they're not, and 'how justice dies when the law is co-opted for political purposes'. Gareth Peirce avoids the media like the plague, but in an old interview, she said: 'We take it on trust that if the government suspects people of terrorism and locks them up, or puts them on control orders without charge, they must be terrorists.' When a political context is as febrile as it is now, it is more likely that governments will dismantle fundamental freedoms, and we won't question what is really going on. Could this crackdown be a reaction or an attempted distraction from the allegation that the British state has failed to uphold international law and arguably been complicit in genocide through its supply of arms to Israel? Either way, the trial promises to be an important test of the principle of freedom of expression. At Glastonbury, Liam Óg Ó hAnnaidh accused Israel of genocide and led the crowd in a chant of "free, free Palestine' as well as anti-Starmer chants. The anti-Starmer chants were explained by British Prime Minister Keir Starmer's remarks last week when he said that it was 'not appropriate' for Kneecap to appear at Glastonbury. Michael Eavis and his daughter Emily, who run the famous festival, were said to have been pressurised not to let them play. At Glastonbury, Liam Óg Ó hAnnaidh accused Israel of genocide and led the crowd in a chant of 'free, free Palestine' as well as anti-Starmer chants. Photo: Yui Mok/PA Meanwhile, in Germany, you can't hold a pro-Palestine demonstration without risking arrest and being accused of anti-Semitism. The Irish writer, Naoise Dolan, has spoken about being detained twice in Berlin for attending pro-Palestinian demonstrations. We're fortunate enough to live in a country where freedom of speech is protected in our Constitution. We received a positive school report from the Democracy Index last year, indicating that we have a fully functioning democracy and are expected to perform well in the 2025 Index. Let's keep it that way because we need dissenting voices now more than ever.
Irish Examiner
3 hours ago
- Irish Examiner
Tensions continue to mount in Coalition over potential student fee changes
Government leaders have moved to put on a united front despite continuing private tensions over student fee changes in the upcoming Budget. Both the Taoiseach and Tánaiste have stressed the coalition is committed to reducing the cost of third level education over the lifetime of the government, after differences of opinion emerged in recent days over whether student fees should be restored to €3,000 from this term. However privately, senior members of Fianna Fáil and Fine Gael have moved to blame the other party for the disagreement which has sparked a backlash from students and families in recent days. One senior Fianna Fáil minister described as "unfortunate" the fact that the parties have become embroiled in a row before proper budget talks have even started, and suggested that Mr Harris was raising expectations at a time when it will be challenging to meet the level of spending which people may be anticipating. However, another Fine Gael minister laid the blame for tensions squarely at higher education minister James Lawless who said student fees, that were reduced by €1,000 over the past three years, will return to €3,000 as Budget 2026 will not contain a cost-of-living package which enabled the cut. The source hit out a "naivety on his part" of Fianna Fáil's Mr Lawless, stating that he "certainly doesn't have an understanding of how the process works". Mr Harris insisted that the Government is united on the issue of student fees, which he indicated will be reduced from early next year. Asked about differences of opinion between Fianna Fáil and Fine Gael on third level fees, Mr Harris stressed that a programme for government had been sign off on by both parties. "This idea that a bill is going to fall due of €3,000 in September isn't actually what happens. Most people don't have three grand under the mattress, or six grand if the two kids come to college, people pay in instalments, often two or three instalments, one before Christmas, maybe one in the new year, one after. So actually, the time that any reduction comes in at isn't the most pertinent point." Speaking in Japan, Taoiseach Micheál Martin said the Government wants to introduce reforms to be sustained across their five year term. 'The Tánaiste and I, and Minister Paschal Donohoe and Minister Jack Chambers have agreed that there won't be a cost of living package this year,' Mr Martin said. What we're going to try and do is mainstream reforms and commitments in the Programme for Government into the Budget, that will be sustained then over a period of time. "But that will create challenges for us in the first year.' Mr Martin said there are other commitments within higher education the Government needs to examine, including the expansion of the SUSI grant and increasing accessibility to third-level for students with disabilities. 'There's a broad range of priorities there. So it'll all go forward to negotiations,' he said. With student fees typically paid in instalments, Mr Martin was asked if it would be possible to cut the second instalment fee for students. He said it 'might be possible', but it was early days ahead of the October budget and it would depend on the funding agreed by the public expenditure minister. Read More Tánaiste insists student fees will be reduced despite coalition tension
Irish Examiner
3 hours ago
- Irish Examiner
Government trade forum examines measures to mitigate global economic uncertainty
The Government trade forum will be briefed on the necessity to prioritise energy, water, transport, and housing projects to counter global economic uncertainty. Public expenditure minister Jack Chambers is currently putting together a revised National Development Plan (NDP), which will allocate billions of euro from the Apple funds into capital projects that can be delivered to promote economic growth. It is expected Mr Chambers will tell the forum, which includes representatives across business, agriculture, tourism, and trade unions, that it is more important than ever to "control the controllables" through strategic allocation of funds to departments where work on projects can commence almost immediately. However, the final funding allocations will not be made until the days before the NDP announcement later this month, as negotiations continue. Finance minister Paschal Donohoe will update the forum on the wider economic impact of tariffs and progress being made ahead of the July 9 deadline for negotiation talks with the US. There is "positive momentum" towards an outline deal with the new normal becoming a baseline tariff of 10% and it is understood the analysis will have a focus on this. Speaking ahead of the forum, Tánaiste Simon Harris said there is no doubt that the days and weeks ahead will see uncertainties and difficult decisions. Ireland will have to be nimble in its responses, Mr Harris said as he emphasised the importance of reaching an agreement that has zero-for-zero "or as near as possible in as many areas as possible". It is important for businesses that have had to contend with months of turbulence that an agreement, or at the very least a framework agreement, can be reached, he said. There needs to be a solution "that can bring certainty for businesses operating in Ireland, in Europe, in the US, that can protect jobs here in this country, investment, and can also avoid a high level of tariffs that are bad for people in terms of the price of goods and services," said Mr Harris.
